On the last day of September, the top floor of the Woods, an upscale bar in Seattle's hipster-central neighborhood, Capitol Hill, was bouncing to old-school house music. Nothing new there – dance music in 2011 has been exhuming classic tracks and sounds like crazy. The name of this party, part of the city's eighth annual Decibel festival, was Loft Revival, a nod to disco's birthplace, New York City's Loft, hosted by David Mancuso (now in London).

But there was something different about who was rocking this dancefloor – not a disco icon such as Greg Wilson or a Chicago house don like Frankie Knuckles, but the Miracles Club, from Portland, three hours south of Seattle. Ryan Boyle stood atop a table and vogued like he was at a shoot for The Face circa 1988 (the only thing his oversized sweater was missing was the Mossimo logo), while producer Rafael Fauria and vocalist Honey Owens played and triggered a surprisingly meaty clutch of tracks that sounded like the late 80s, as well.

Surprising, since Owens isn't known primarily as a dance artist: she has spent time in the sprawling experimental rock troupe Jackie-O Motherfucker and has more recently recorded downcast guitar ballads as Valet, for the Kranky label. By contrast, the Miracles Club (named after a halfway house for recovering addicts in Portland) record for Ecstasy Records, a new label devoted to the quarter-century-old house sound of Chicago.

Owens is part of a new wave of punk and indie-identified musicians who are diving headfirst into electronic dance. "Hipster house" is the term that seems to have caught fire, though John Calvert on the website Drowned in Sound came up with "chill-rave". Indeed, Owens and Amanda Brown, who runs the Los Angeles-based label 100% Silk, reference early-90s rave in a firsthand, offhand way; clearly, part of the reason they find late-80s house appealing is because they've been rediscovering it alongside many of their listeners.

"It's no secret there's been this kind of groundswell of people doing dance music that don't normally do dance music," says Brian Foote, who runs Ecstasy Records. "I was really excited when Honey and Rafael started doing Miracles Club because I felt like dance music has such a hang-up about purity anyways – always having to look back at the lineage. It's not cheeky and it's very sincere. That's what I think Ecstasy is born from."

"With Valet, it was really hard for me to do the record live," Owens says. "You're alone and it's not party music." The Miracles Club, she says, is the opposite: "Anything that we recorded, it had to be able to be done live." Fauria and Owens performed alone when Boyle, who had worked with Owens, heard them and decided to join: "He was like: 'I want to dance for this band.' He was already like five steps ahead of us. It wasn't like: 'We're going to have this Bez kind of dancer.' We were more about a feeling."

"There's this whole argument: Is it dilettantes?" Foote says. "I feel like they're being uber-respectful to dance music, and it's not a put-on and it's not some kind of post-ironicism or something. They're about it, you know? It's not a facsimile."

The Miracles Club are best understood within the context of their city. "Until 2003 to 2004, there was really not much of a dance scene in Portland," says Michael Mannheimer, a former editor of the region's alternative paper Willamette Week. "I think people were clamouring for it." He says that the shift really hit gear with the mid-noughties ascent of the bands Chromatics and Glass Candy: "All of a sudden, you had people doing house stuff but incorporating indie-rock sounds, with people singing. A bunch of 19-year-old kids that only listened to indie rock [said]: 'Hey, we can dance now, too.'"

Chromatics and Glass Candy are just two of Portland musician Johnny Jewel's projects, all of which record for Italians Do It Better. The label is based in Maplewood, New Jersey and run by Mike Simonetti, who is in many ways the defining indie-into-dance figure. Simonetti's first label, Troubleman Unlimited, issued more than 200 indie, punk, and post-punk singles and albums. Among them, the 2001 double-CD collection Troubleman Mix-Tape would prove a harbinger of a different rock-into-dance moment, as flailing basement bashers started to lean on a herky-jerky beat, which Simonetti refers to as "boots and socks", since "the drums go boots-and-socks-and, boots-and-socks-and, boots-and-socks-and, boots-and-socks-and," he says, mimicking a fast punk-funk beat, then laughing.

But Simonetti had a deep dance-music background, too: he has DJed since college and worked as a teenager for New York's hip-house mecca, Mars. "I wasn't thinking, 'I'm going to watch Bobby Konders,'" he says. "I was there to make money, maybe meet some girls, dance, hang out with my friends, listen to rap, you know what I'm saying?" He started Italians Do It Better in 2007 to showcase the electronic-dance side of his tastes, which have taken over: Troubleman hasn't issued anything in more than two years. Italians put out Simonetti's own debut album, Capricorn Rising, in July.

"I think Italians is one of those labels that will actually go down a little bit in history," says Brown. "He came out with that aesthetic, that was so disco and sparkly, being unapologetic about it. You have to say: 'I'm not embarrassed. I'm making this music now, and you can either all follow me or detract, and I'm not worried about it.' I like Mike quite a bit."

Indeed, Brown's label follows Simonetti's template. Together with her husband, Britt Brown, she began the lo-fi-leaning Not Not Fun Records in 2004, issuing cassettes, seven-inch singles and albums by acts such as Pocahaunted (the Browns' band), Abe Vigoda, Sun Araw, Vibes and Magik Markers. They began 100% Silk this year.

"Running Not Not Fun, we never had it in our minds to do anything dancey," says Brown. "It wasn't really a goal of mine until about two years ago. I started to realise that those were the kinds of demos and masters I wanted to be getting. I never really expected anyone to take me seriously, but pretty much immediately friends and musicians and people on the internet started contacting me."

Brown knew the preconceptions she would face running 100% Silk. "Dance is a really closed-off scene, and also a very serious scene – very serious people," she says. "When you do something [that's] in the spotlight for a minute, people treat you like you're reinventing a genre, or reinventing a division in the underground. And then everybody else who's been doing it forever just gets up in arms, and they start to hate you, because of the way that you're being portrayed. I was absolutely nervous about that. The last thing I want is to offend anyone who's been doing this for years. I'm sure some people are still like, 'I've been doing this for 15 years, what on earth does this girl think she's doing?' I can only just try to have the longevity. As long as I'm getting amazing music, I'm going to keep pushing it."

Brown says that there's not much crossover between Not Not Fun's audience and 100% Silk's. "If you were going to make a Venn diagram, that middle spot would be slim," she says. "But I think that it's growing. It's very hard to change people's minds when they're already such picky, aesthetic people. It's funny how you find out very quickly that the underground is not so open-minded all the time. I think in America especially, people have gotten used to thinking dance music is corny, this throwaway thing. You have to ask people to dance, to be a little lighthearted. That is the hardest part. That's not what everyone wants from music, you know? People want to be quite academic. Maybe asking them to dance and to be uplifted by it is asking too much."

Foote remains positive. "I think all bets are off," he says. "Especially [since] dance music has always been an ever-morphing type of affair, self-faction-and-fractionising into smaller and smaller genres. As a broader thing, I think it's great that people who are not so beholden to dance music's rigid hierarchy and lineage are having [a go] – and even better if they're coming at it from 17 different angles."